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Global > United Kingdom >  Services > Tax > Budget 2007 > Foreign properties owned by companies
 

 

Foreign properties owned by companies

Draft legislation for consultation will be published later in 2007 which should clarify the tax position of individuals who hold properties abroad through companies. The legislation will exempt such individuals, subject to certain conditions being met, from benefit in kind tax charges on the occupation of the property.

The conditions referred to are:

  • the property owning company must itself be owned by individuals;

  • its only or main asset is the property;

  • the company’s only activities are incidental to its ownership of the property; and

  • the property is not funded either directly or indirectly by a connected company.

Our view
It has been common to own foreign holiday homes through a company because of the laws in certain countries with compulsory inheritance regimes. The legislation to be introduced is a welcome clarification and confirmation of the Deloitte view that there should not be a UK tax charge on the occupation of the property. Deloitte has been pressing HMRC to introduce such relieving legislation for many years.
 
   

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